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Iran travel sector: Ups and downs since U.S. reimposed sanctions

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Last November, the Trump administration reinstated sanctions on Iran, mainly the ones that had been lifted under the 2015 nuclear deal, in order to batter Iran’s economy, however, according to official data, they have so far failed to lessen foreign arrivals to the Islamic Republic.

Although the sanctions together with anti-Iran propaganda campaigns have decreased Western tourists but the country has managed to compensate and even improve by doing its best to attract more from neighboring states.

When it comes to outbound tourism, the effect of sanctions are seemingly more obvious as sharp rises in the value of foreign currencies against rial have pushed up the costs of traveling in the country.

A total of 1,759,749 Iranians traveled abroad in the first quarter of the current Iranian calendar year (March 21-June 21), indicating a 6.5% decrease compared with 1,882,414 outbound tourists in the same period last year, financialtribune.com reported in an article released on Monday.

“Nearly 7.8 million foreign nationals visited Iran over the past year that shows a 52.5 percent increase year on year. The country hosted 5.1 million travelers in 1396 (March 2017-18),” deputy tourism chief Vali Teymouri said in April.

“One of the shortcomings in Iran’s tourism industry is the government’s issuance of work permits to travel agencies without taking into consideration the number of inbound and outbound tourists. Less than 5% of travel agencies in Iran are active in organizing inbound tours, whereas 95% of them have focused on outbound tourism,” Hormatollah Rafiei, the head of Travel Agents Guild Association, said.

To tackle such harms, the association has decided to set up a committee tasked with curtailing the number of travel agencies’ closure by channeling them toward conducting more inbound tours.

“In two months, between 30 and 50 agencies are going to direct their activities toward attracting tourists from 10 countries, including Iraq, Afghanistan, Turkey, Pakistan, Turkmenistan, Georgia, Armenia and China,” Rafiei added.

Regarding to the downfall of potential Western visitors, Skift Inc., a New York City headquartered media company that provides news, research, and marketing services for the travel industry, said in July article that “Despite setbacks, [international] tour operators are optimistic about long-term growth in tourism to Iran, which in recent years has stepped up efforts to increase international visitation and has the stated goal of attracting 20 million annual visitors by 2025.

While the U.S. State Department has long issued strong advisories against traveling to Iran and despite tensions between the two countries, tour operators who spoke with Skift strongly disagree, maintaining that Iran has proven to be a safe and remarkably hospitable place for travelers, including Americans.

“It is a country that is often portrayed as unwelcoming, but the reality is quite the opposite,” said Jenny Gray, the global product and operations manager of the Australia-based Intrepid Travel.

“Iranians are warm, friendly and eager to show off their country to foreigners. The feedback from our travelers is a testament to this.”

“Once they [Iranian authorities] have been approved for entry [issuing visas], people are welcomed warmly—we’ve never encountered a problem or even a cold shoulder,” said Robin Pollak, the president of Journeys International, which is offering Iran tours since 2015.

“People in Iran are very curious about visitors from a culture that is off-limits to them. They understand that American visitors do not reflect the way America is portrayed to them by their government,” she added.

To compensate the fall, Iran has turned to ease traveling for its target markets which are people from Iraq, China, Republic of Azerbaijan, Afghanistan, Turkey, Pakistan, and several other countries who arrive in Iran for medical, pilgrimage and cultural heritage purposes.

Some two million Iraqi nationals visited Iran during the first seven months of the past Iranian calendar year (ended on March 20), constituting Iran’s largest source of inbound passengers.

Mousa Tabatabai, assistant to Iran’s ambassador to Baghdad, told Al-Monitor in early July, “The number of Iraqis arriving in Iran for religious tourism and treatment is growing bigger on a yearly basis. This is added to those who travel to Iran to see their relatives. The visas are issued depending on the demand.”

“There are 2-3 million Iraqis arriving in Iran every year. Such a figure will more likely increase as the visas have become free of charge between the two countries,” Tabatabai explained.

Iran also eyes to have a bigger share of Chinese tourism, as it, in a unilateral measure, recently approved to waive the visa requirement for the Chinese passport holders.

To encourage and reassure sightseers, the Iranian government has decided not to stamp the passports of foreign tourists to help them skip the U.S. travel ban.

“President Hassan Rouhani assigned the airport police not to stamp passports of foreign tourists. Taking into consideration the fact that America is practicing the economic terrorism plans, and people who travel to Iran may feel a bit afraid that they may be pressured by America,” Government spokesman Ali Rabiei said earlier this month. He added that this can invite more tourists to Iran.

The World Travel & Tourism Council’s latest report indicates that Iraq was the main source of tourism for Iran in 2018, as Iraqis constituted 24% of all inbound visitors. Other major sources were Azerbaijan (17%), Turkey (8%), Pakistan (4%) and Bahrain (2%). The remaining 46% came from the rest of the world.

WTTC’s review of tourism spending in Iran in 2018 shows 93% of visitors spent for leisure purposes while only 7% spent on business purposes. The council ranked Iran 20th from among 185 countries in its 2017 power ranking, which evaluates countries in terms of absolute size growth measured in U.S. dollars in the field of travel and tourism.

The 2019 Travel Risk Map, which shows the risk level around the world, puts Iran among countries with “insignificant risk”, a category where the UK, Denmark, Switzerland, Norway, and Finland are placed in.

The country boasts hundreds of historical sites such as bazaars, museums, mosques, bridges, bathhouses, madrasas, mausoleums, churches, towers, and mansions, of which 22 being inscribed on the UNESCO World Heritage list.

Currently, Iran’s constant efforts to recover the value of Iranian rial against the U.S. dollar have paid off. The national currency is strengthened about eight percent in the open market over the past month to 125,450 per dollar, traders in Tehran, according to prices compiled by Bloomberg from foreign-exchange websites.

Travel associates see better prospects for tourism sector of the country as policies for shielding the currency against the U.S. sanctions are taking effect.

From our partner Tehran Times

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Economy

The CIIE: A gorgeous chorus of integrated world economy

Chang Hua

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The 2nd China International Import Expo (CIIE) will be held in Shanghai, China from November 5th to 10th. Iran will participate in Country Exhibition, Business Exhibition and Hongqiao International Economic Forum (HIEF). Here, I would like to introduce the CIIE to Iranian friends.

The 1st CIIE achieved great success. On November 5th to 10th, 2018, the first CIIE was successfully held in Shanghai, China, with a profound influence around the world. First, the scale of the exhibition was large. Covering a total area of 300,000 square meters, 172 countries and international organizations participated, and 3,617 overseas companies took part in the exhibition, fully reflecting the strong appeal of the Chinese market. Second, the level of the exhibition was high. More than 220 of the world’s top 500 companies participated in the exhibition, and more than 300 new products and technologies were first released. Third, the result of the exhibition was rewarding. More than 800,000 exhibitors and purchasers attended the conference, concluding contracts over  US$57.8 billion.

During the 1st HIEF, Chinese President Xi Jinping attended the opening ceremony and delivered a keynote speech. More than 30 foreign heads of states and international organizations delivered speeches and more than 4,500 delegates attended the forum. The Country Exhibition covered all five continents, including developed countries, developing countries and least developed countries. The Country Exhibition pavilions had different styles, highlighting their own characteristics, and making full use of high-tech means and diverse forms to display their unique regional culture and distinct advantageous industries, including goods trade, service trade, industrial development, investment, tourism and specialty.

The second CIIE is quite worth expecting. Namely, its scale will be even larger. The exhibition area has increased from 300,000 to 330,000 square meters. More than 170 countries, international organizations, over 3,000 exhibitors and 400,000 purchasers have signed up for the exhibition. There will be more than 200 supporting and facilitating activities, such as interpretation of economy policies, release of research reports, international cultural exchange, corporate promotion, as well as sellers and buyers’ matching negotiations. Its quality will be further upgraded. The exhibitors are more diversified. The number of companies in the world’s top 500 and leading industrial enterprises exceeds that of the first CIIE, and there will be even more visitors and international purchasers. Professional, high-quality, cutting-edge and featured exhibits will be more concentrated and the quality will be further improved. Its innovation will be much stronger. This year, for the first time, the CIIE news release platform will be set up. The Chinese ministries and local governments will jointly interpret important policies. International organizations and research institutions will release annual reports and industrial reports respectively. The CIIE will continue to be chosen as an ideal platform by participating companies to launch their products and technologies, the number of which is expected to overpass last year’s. Innovative exhibition forms such as quality life, technology life, and artificial intelligence will give participants a first-class experience.

As a major feature and highlight of the CIIE this year, there will be more than 60 countries participating in the Country Exhibition, covering an area of about 30,000 square meters. The theme of HIEF this year is “Openness, Innovation, Cooperation, and Win-win”. More than 50 important speakers from political, business and academic fields including WTO Director-general, UNCTAD Secretary-general, Nobel laureate in economics and leaders of global top 500 enterprises, will jointly explore the new trend of global economic development, share their views and insights on meeting new challenges, overcoming difficulties, and finding ways for further developing globe economy in the new era.

The open and cooperative CIIE will never end. The CIIE was first initiated, planned, deployed, and promoted by President Xi Jinping in person. As an event to be held on an annual basis, the CIIE will feature good performance, good results and continued success in the years to come. Adhering to the global governance concept of extensive consultation, joint contribution and shared benefits, the CIIE welcomes countries to share China’s development dividends. It provides new opportunities for countries to expand exports to China, but also develop trade relations with third countries. It builds a new platform for countries to demonstrate national development achievements and to explore global economic and trade issues. It injects new impetus to global trade and world economic growth. Upholding the spirit of openness and cooperation, the CIIE is not a China’s solo show, but rather a chorus of countries of all over the world. Working together with the international community, China is willing to develop the CIIE into an effective channel for the goods, technologies and services from the world to enter the Chinese market, an open and cooperative platform for countries around the world to strengthen cooperation and exchanges and conduct international trade, an international public product to promote economic globalization. China is willing to make joint efforts with the world to construct an open world economy, build a community with a shared future for mankind, and facilitate better development of global trade and world economy.

I believe that Iranian companies participating in this year’s CIIE will be warmly welcomed with the world-famous Persian carpets, saffron, handicrafts and etc…The Iran Country Exhibition High-Tech Pavilion will open a new window for China and other countries as well to perceive and further understand Iran’s technological strength and advanced products with its featured products in the fields of IT, energy, environment, nano, biology and health. As an important hub along the Silk Road , Iran’s voice and view will be heard at HIEF and spread to the rest of the world.

Here, I wish CIIE a gorgeous chorus of the integrated world economy and having a long-lasting profound impact of the world.

From our partner Tehran Times

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Modi’s India a flawed partner for post-Brexit Britain

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With just two weeks to go until Britain is scheduled to exit the European Union, Boris Johnson and his ministers are understandably focused on the last-minute dash to formulate a workable Brexit deal with the EU. Once this moment has passed, however, either Johnson or whoever replaces him as PM will come under intense pressure to deliver the trade deals Brexit side supporters have so talked up since 2016.

One such envisaged deal is with India. Seven decades after securing independence from Britain’s colonial empire, New Delhi has the world’s seventh-largest economy and one of its fastest growth rates. The prospect of deeper trade ties with Asia’s third-largest economy has been a major feature of the pitch for a “Global Britain” that extends the UK’s reach beyond the continent, and Johnson himself made a big thing of expanding economic ties with India while campaigning to become PM.

Unfortunately, any plans to kickstart trade agreements with India will run into problems, and not just over immigration and visa issues. India is on the verge of a serious economic downturn, hit by job losses and decreasing levels of foreign investment. With growth slowing down, Indian PM Narendra Modi has fallen back on his aggressive brand of Hindu nationalism to galvanise public support, a gambit that has most recently resulted in his government’s controversial move to strip automony from Kashmir.

Bad time for a UK-India trade deal

Whereas only a few years ago India was held up as one of the world’s fastest growing economies and an enticing prospect for global trade and investment, Moody’s new projection of a 5.8% growth rate represents a danger to Narendra Modi’s promise of a $5 trillion economy. Recently released figures show India’s GDP growth falling for the fifth successive quarter, to a six-year low of 5.2%.

India’s economic woes are reflected in patterns of foreign investment. Around $45 billion has been invested in India from abroad over the last 6 years. The downturn in the country’s economic fortunes has seen a record $4.5 billion of shares sold by foreign investors since June this year. These economic problems are linked to Modi’s failure to carry through on economic reforms promised when he came to power in 2014, when a number of structural problems were seen as inhibiting external trade relationships.

India currently has over 1,000 business regulations and more than 3,000 filing requirements, as well as differing standards for social, environmental and human rights. These have been sticking points in the moribund trade deal negotiations between India and the EU, and Brexit advocates have not explained how they plan to overcome these hurdles.

Hostility to foreign companies

Structural issues are only part of the problem. Another key concern is the Indian government’s adversarial attitude towards foreign investors. Despite Modi’s promises to make India an attractive place to do business, his government has continued protectionist policies that throttle the country’s ability to attract outside capital.

One issue is retrospective taxation. Under Modi’s predecessor, Manmohan Singh, several British and international firms were hit with sizeable, legally dubious tax bills by the Indian government. Modi came to power on a promise of ending retrospective tax bills being imposed on overseas companies, and yet British firms such as Vodafone and Cairn Energy still find themselves pursued through the courts for back-dated tax bills, despite the protections they should enjoy under the bilateral investment treaty between India and the UK.

Vodafone’s case involved its 2007 acquisition of a stake in cellular carrier Hutchinson Essar. While the deal did not take place in India, New Delhi determined Vodafone still owed $5 billion in taxes on the overseas transaction. After the Indian Supreme Court dismissed the claim in 2012, India’s previous government introduced a new law to tax transactions of this nature that retroactively applied to cases going back to 1962. Modi attacked this “tax terrorism” at the time, but his government has continued its dogged pursuit of Vodafone in the courts.

Cairn Energy has faced an equally arduous struggle with the Indian Ministry of Finance, which in 2014 blocked the British firm from selling its 10% stake in Cairn India and subsequently demanded $1.6 billion in taxes. Indian officials used the 2012 law to justify their actions, violating the bilateral investment treaty and breaking one of Modi’s own campaign promises in the process.

Immigration laws a further sticking point

This recent history should already give British businesses pause, but the most obvious obstacle in any trade negotiations between UK and India will be the issue of immigration. The Centre For European Reform has argued post-Brexit trade will be closely linked to opening up UK borders to workers from partner countries, but a UK Commons Foreign Affairs Select Committee report in June highlighted how Britain’s immigration restrictions on Indian workers, students and tourists has already impacted bilateral trade relations. The report noted how the UK has slipped from being India’s 2nd largest trade partner in 1999 to 17th in 2019, adding that skilled workers, students and tourists are deterred from coming to the UK by the complicated, expensive and unwelcoming British migration system.

It is unlikely the Modi government will agree to any UK-India trade deal that doesn’t guarantee a relaxing of immigration rules that will allow a free flow of people as well as goods and capital between the two countries. The question is whether the British government, which has veered ever more closely towards a Brexit-fuelled populism at odds with relaxed border controls, will be flexible enough to sign up to this.

Given these issues, are Britain’s hopes for a post-Brexit dividend in Indian trade dead on arrival? Unless Modi’s government starts living up to international standards and honouring his country’s investment agreements with British companies, “Global Britain” may not get much further with India than it has with the US.

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A more effective labour market approach to fighting poverty

Cynthia Samuel-Olonjuwon

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Gainful employment is still the most reliable way of escaping poverty. However, access to both jobs and decent working conditions remains a challenge. Sixty-six per cent of employed people in developing economies and 22 per cent in emerging economies are in either extreme or moderate working poverty, and the problem becomes even more striking when the dependents of these “working poor” are considered.

Thus, it is not just unemployment or inactivity that traps people in poverty, they are also held back by a lack of decent work opportunities, including underemployment or informal employment.

Appropriate labour market policies can play an important role in the fight to eradicate poverty, by increasing access to job opportunities and improving the quality of working conditions. In particular, labour market policies that combine income support for jobless people with active labour market policies (ALMPs).

The new ILO report What works: Promoting pathways to decent work  shows that combining income support with active labour market support allows countries to tackle multiple barriers to decent work. These barriers can be structural, (e.g. lack of education and skills, presence of inequalities) or temporary (e.g. climate-related shocks, economic crises). This policy combination is particularly relevant today, at a time when the world of work is being reshaped by global forces such as international trade, technological progress, demographic shifts and environmental transformations.

Policies that combine income support with ALMPs can help people to adjust to the changes these forces create in the labour market. Income support ensures that people do not fall into poverty during joblessness and that they are not forced to accept any work, irrespective of its quality. At the same time, ALMPs endow people with the skills they need to find quality employment, improving their employability over the medium- to long-term.

New evidence gathered for this report shows that this combination of income support and active support is indeed effective in improving labour market conditions: impact evaluations of selected policies indicate how people who have benefited from this type of integrated approach have higher employment chances and better working conditions.

One example of how this combined approach can produce results is the innovative unemployment benefit scheme unrolled in Mauritius, the “Workfare Programme”. This provides workers with access to income support and three different types of activation measures; training (discontinued in 2016), job placement and start-up support. The programme was also open to those unemployed people who were previously working in an informal job. By extending coverage to the most vulnerable workers, the scheme has helped reduce inequalities and unlock the informality trap.

Another success came through a public works scheme implemented in Uruguay as part of a larger conditional cash transfer programme, the National Social Emergency Plan (PANES). The programme was implemented during a deep economic recession and carefully targeted the poorest and most vulnerable.

Beneficiaries of PANES were given the opportunity to take part in public works. In exchange for full-time work for up to five months, they received a higher level of income support as well as additional job placement help. This approach reached a large share of the population at risk of extreme poverty and who lacked social protection. The report indicates that providing both measures together was critical to the project’s success.

The effects of these policies on poverty eradication cannot be overestimated. By tackling unemployment, underemployment and informality, policies combining income support with ALMPs can directly affect some of the roots of poverty, while enhancing the working conditions and labour market opportunities for millions of women and men in emerging and developing countries.

ILO

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